Correlation Between Evolution Mining and Orezone Gold

Can any of the company-specific risk be diversified away by investing in both Evolution Mining and Orezone Gold at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Evolution Mining and Orezone Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Evolution Mining and Orezone Gold Corp, you can compare the effects of market volatilities on Evolution Mining and Orezone Gold and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Evolution Mining with a short position of Orezone Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution Mining and Orezone Gold.

Diversification Opportunities for Evolution Mining and Orezone Gold

0.01

Correlation Coefficient

Evolution Mining  Orezone Gold

Significant diversification

The 3 months correlation between Evolution and Orezone is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Mining and Orezone Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orezone Gold Corp and Evolution Mining is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Evolution Mining are associated (or correlated) with Orezone Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orezone Gold Corp has no effect on the direction of Evolution Mining i.e., Evolution Mining and Orezone Gold go up and down completely randomly.

Pair Corralation between Evolution Mining and Orezone Gold

Assuming the 90 days horizon Evolution Mining is expected to generate 0.9 times more return on investment than Orezone Gold. However, Evolution Mining is 1.11 times less risky than Orezone Gold. It trades about 0.08 of its potential returns per unit of risk. Orezone Gold Corp is currently generating about -0.06 per unit of risk. If you would invest  287.00  in Evolution Mining on September 13, 2024 and sell it today you would earn a total of  39.00  from holding Evolution Mining or generate 13.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Evolution Mining  vs.  Orezone Gold Corp

Evolution Mining

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Evolution Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Orezone Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orezone Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Evolution Mining and Orezone Gold

The main advantage of trading using opposite Evolution Mining and Orezone Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution Mining position performs unexpectedly, Orezone Gold can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Orezone Gold will offset losses from the drop in Orezone Gold's long position.

The idea behind Evolution Mining and Orezone Gold Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.